If Denver gets new Amazon HQ, how will it affect surrounding mountain communities?
January 26, 2018
Last week the Seattle-based tech behemoth Amazon announced that Denver is one of 20 cities on the company’s short list as they search for a location for their second headquarters. Selected out of a field of almost 240 cities, Amazon made it clear that there’s something they like about Colorado.
“This really wasn’t a surprise at all,” said Chris Hallberg, founder of Denver-based business advisory company Traction, Inc. “Denver is the new Silicon Valley, I’ve heard that for years. It’s not hard to get people to relocate here because of the healthy lifestyle, the great weather and the Rocky Mountains.
“There’s an obvious draw. There’s a fun culture and the millennials kind of run downtown. The housing is all new, and it’s really fettered toward the tech worker.”
Hallberg said that the main draw to Denver, and its surrounding areas, for a company like Amazon has more to do with culture and other ancillary issues than economic incentive packages. On top of exceptional weather, natural beauty and recreation which could help separate Denver from competitors, the city also boast a world-class airport and centralized location at the intersection of several interstate highways, making transportation easier.
Colorado’s residents also make it a compelling option.
“We should be talking to them about our educated workforce, and about how we’re adaptable,” said Victor Mitchell, Republican gubernatorial candidate and former state legislator. “We can get communities to customize and adapt special worker training programs. We also have a very young population.
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“There’s many attributes that give us competitive advantages over any of the other cities. The economic incentives would just go down a black hole to a company like that.”
Mitchell gets the conversation started on the flip side of the coin. Amazon likes Colorado. But what should Colorado think of Amazon?
Mitchell is pro-Amazon, but vehemently opposes any economic development incentives to entice them, believing that the state should be using the incentives on small- and medium-sized companies to grow their business.
Others believe Denver should avoid Amazon altogether.
“We don’t need this,” said Jeffrey Zax, economics professor and associate chair of undergraduate studies at the University of Colorado Boulder. “There’s no reason to believe that the Amazon location here is going to bring substantial benefits to the state. We have a 3 percent unemployment rate. With installations like this, most big jobs are taken by people moving in from out of state. People coming in are going to compound some of the issues we already have.”
Zax is referring to common concerns like traffic congestion and a lack of affordable housing. But he also believes the addition of a company using economic incentives may not be healthy for the economy.
“Successful economic development is organic economic development,” said Zax. “Successful economic development comes from employers and businesses being here because they want to be here, and not because they’re being paid to be there. I think it’s an unhealthy way to build the economy, by essentially bribing employers to come here.
“The evidence of the effectiveness of these kinds of economic developments that rise out of providing companies with substantial economic incentives indicates there’s little to no gain to the state as a whole.”
J.B. Holston, dean of the Daniel F. Ritchie School of Engineering & Computer Science at the University of Denver, is a strong advocate of bringing Amazon to Denver, and has been active in the recruitment process. Holston believes Amazon will bring more philanthropic opportunities and strengthen workforce development, giving Colorado natives a better chance to stay in the state for the long haul if they choose.
Holston also said Amazon could prove an important partner in tackling infrastructure problems, housing problems and begin helping Denver plan for the future.
“What’s interesting to me is they’re not just a partner paying taxes, but they’re a great innovating company,” Holston noted. “It gives us a partner for infrastructure development. They’re doing cool things with respect to autonomous vehicles. They’re the most innovative company in the world right now on a whole bunch of different fronts.
“I think having someone like that as a partner is valuable as we figure out things like how to introduce autonomous vehicles in Colorado in an appropriate way. It gives us an opportunity to accelerate better solutions for traffic and housing. We’ll have to address those things anyhow. It gives us a shot to do this with a big innovative player, that now cares that we do it in a way that’s appropriate for their 50,000 families.”
Opinions vary as to the expected effects of potentially making an Amazon-sized splash in the Colorado economy (the new headquarters promise an added 50,000 jobs averaging six-figure salaries), but the ripples making their way to surrounding mountain communities might be more predictable.
Experts agree that the injection of cash and transplants into the Denver metro area would likely lead to at least a modest increase in some of the areas biggest industries like tourism, recreation and lodging.
“It adds to the contribution of people who can afford to have second homes and travel to the mountains,” said DiAnn Butler, Grand County’s economic development coordinator.
Zax said that the ripples could also include the worsening of traffic on I-70 and the exacerbation of the counties affordable housing issues, but noted that housing demand will rise regardless of Amazon’s arrival.
“If Amazon moves here that will give it an additional shove,” said Zax. “Housing is going to go up anyhow, and if you want housing prices to remain affordable, you have only one option, which is to increase supply to meet the demand.”
“From a pure capitalist perspective I love it,” said Hallberg. “As a citizen of Colorado I don’t know that it’s the best thing for this market. I’m absolutely conflicted. They need to look at this holistically, and not just through the lens of economic development, but quality of life development. What does our infrastructure support? And are our eyes bigger than our stomachs on this one?”